G4S plc provides trading update for 2020 on day of Annual General Meeting

Secure Solutions revenues have experienced growth in the Americas (+6%) and Asia (+2%), with a slight decline in Africa of 1%. As expected, the impact of COVID-19 was greatest in the European and Middle East markets, where revenues declined by 6%. Secure Solutions revenues for the months of April and May declined by 4% compared with the same months in 2019. 

Cash Solutions revenues in April and May were 35% lower year-on-year. G4S expects its Cash Solutions business to begin recovery in the second half of this year with the easing of lockdown restrictions.

As a whole, Group revenues were 1% lower than for the first five months of 2019. Group revenues in April and May were down by 7% when compared to the corresponding period last year..

The Group has adopted a prudent stance in relation to liquid resources. It boasts a conservative debt maturity model and a strong liquidity profile, which is further boosted by the proceeds being realised from the previously announced sale of the conventional cash businesses. Consistent with this prudent approach, the Board decided to suspend the 2019 final dividend payment, while management has implemented robust cost control and cash flow improvement measures (including the deferral of around £100 million worth of tax payments to 2021 across a number of countries).

As at 31 May, the Group had liquid resources of £1.5 billion comprising cash, cash equivalents and bank overdrafts of £0.9 billion and committed, unused credit facilities of £0.6 billion.

Important inflexion point

Commenting on the first five months of 2020 trading, G4S Group CEO Ashley Almanza (pictured) observed: “G4S is at an important inflexion point as we rapidly transition towards a highly focused global business delivering technology-enabled security solutions. The sale of our conventional cash business is 75% complete, reducing our net debt and strengthening our strategic, commercial and operational focus.” 

He continued: “The benefits of our strategy are evident. Our Secure Solutions business, which is worth £2,574 million, now represents over 90% of the Group’s pro-forma revenues and benefits from a growing proportion of consulting and technology-enabled revenues. In the first five months, the strength of our security business substantially offset the lower cash volumes. Group revenues for the first five months were slightly lower (1%) than the same period in 2019. We expect our Cash Solutions business to begin to recover as the pandemic lockdown restrictions are eased.” 

The competitive performance of the Group has continued to be strong with contract wins totalling £1.2 billion worth of annual contract value (2019: £1.2 billion). This is said to provide further confidence in the Group’s outlook for 2020 and beyond.

Almanza stated: “In response to the COVID-19 pandemic, we continue to reinforce Health and Safety measures for employees and customers alike, assure service delivery and protect the company’s financial performance, cash flow and overall financial position. As previously reported, the Group is implementing restructuring and cost saving measures to reflect the disposal of the conventional cash businesses and in response to the pandemic. As we continue to focus and simplify the Group, we expect to identify additional savings.”

In conclusion, Almanza said: “Given the benefit of the disposal proceeds from the Brink’s transaction, the resilience of our trading performance and the benefit of the restructuring and cost saving measures, G4S currently expects to deliver resilient underlying operating profit and substantial net cash flow in 2020, thereby placing the Group in a strong competitive position as we enter 2021. The Board is confident that the Group’s diversified revenue base, financial strength and liquidity provides G4S with sustainable resilience and significant opportunities. As we complete the sale of our conventional cash businesses and execute our COVID-19 response plans, we expect to emerge as a leaner and more focused market leader in the global delivery of technology-enabled security solutions.”

*Results for the six months to 30 June 2020 will be published on Wednesday 12 August